Back to the basics for SMEs

The severe competition and economic slowdown means small  and medium-sized businesses must adjust their strategies to survive and prosper.

In the book "Turning It Over, Rebuilding Thai Businesses", authors Chusak Dejkriengkraikul, Manatsiri Phueaksakon, Nitas Kanawan and Teerapol Saetang suggest SMEs first review their management foundation or get back to the basics of "ABCD":

A - Analysis: a clear understanding of customers, markets and products is essential.

B - Budget: budget, revenue and expenses have to be well balanced. Income is derived from customer base, market base and product base. Expenses are product costs, inventory costs, sales administration, delivery,  marketing costs and staffing.

C -  Channel: there are three channels - sales channel, communication channel and service channel.

D - Direction: set the direction and move forward along the path that has been decided.

To handle price competition, SMEs can enhance their competitiveness through:

n Innovation and creativity - Find new ways to extend existing ranges of products and services. It is unnecessary to do everything yourself.

n Uniqueness or specialisation - Customers are usually willing to pay more for services and products that they cannot find elsewhere.

n Networking -It is vital to build alliances to share expenses such as the cost of opening shops or transport. With alliances businesses can exchange customers, products or, through joint marketing and co-investment, create new market trends.

n Retaining customers - It is important to build a strong existing customer base before expanding to capture new ones. Persuading existing customers to repeat their purchases is eight to 10 times easier and cheaper than finding new ones.

n Building partnerships - Find new partners to help you acquire new customers. For example, if you sell tyres, you may join forces with a pertrol  station to give away vouchers. If you are in the flower delivery business, you may strike a deal with nearby restaurants that are popular dating places.

n Expanding - Explore ways to expand into the Indo-Chinese market and into neighbouring countries that accept the baht. Be prepared for the unification of the Indo-Chinese market, which has a population of more than 220 million.

SMEs should stop clinging and become more flexible. Many businesses tend to cling to past success and think the future will be as good. They cling to old, ineffective ways of doing business and expect them to handle the new environment. Flexibility is the door to prosperity. It involves being ready to adapt, being knowledgeable, being prepared and being creatively flexible.

The book, written in Thai, has been published by Busy-Day.